The current design of the Euro is poisoning European unity

2015-07-12

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The regular reader of my articles is aware of the fact that I play no blame games. This is not a matter of political correctness. European history and the social sciences teach us that systems condition the behaviour of agents. If we focus solely on agents, call them “Tsipras”, “Merkel”, “Schäuble”, or whatever, we remain utterly oblivious to the structures influencing them and to milieu in which their actions are made manifest. We are, in other words, committing the analytical error of failing to account for all the [interoperating] factors constitutive of the case.

In light of the current events and to provide the gist of my last four analyses (here, here, here and here), I have to state that the current design of the Euro/EMU is not only suboptimal, it is in fact an impediment to the unity of Europeans. If it remains in its current state, it will inevitably jeopardise the European integration process. This is not a matter of individual ministers or heads of state, it is a design flaw.

The model of the single currency is predicated on the egregiously fallacious notion of “common rules without common politics”. The assumption is that there can be a “federal-level” set of legal principles that bind nation states together, without there being a corresponding “federal-level” political sphere. In the absence of common politics, the emergent antinomy is that the good of the place _is not necessarily aligned with the good of the _space.

Put differently, a specific government is catering only to its own electorate, missing the “bigger picture”. The same happens across all governments, resulting in inherent contradictions within the various intergovernmental fora of the Union. The intergovernmentalist setup of the EMU is pitting Europeans against each other, as there is no common locus for sovereign will-formation. Conflicting interests coagulate along national lines. There is no European People with a Europe-wide democracy to resolve these tensions.

These are trying times. The leaders of this continent are facing a very specific challenge they have always tried to wish out of existence: the problems in Greece are not just Greek, they reveal the systemic shortcomings of the Euro. The Greek issue will be solved within the framework of a wider solution.

To properly address the design flaws of the single currency, European leaders have to effectively choose between its [dis-]orderly disintegration or, in a major turn of events, make a big push for the full democratisation of Europe’s Economic and Monetary Union. Anything else will perpetuate the underlying deficiencies of this system, inadvertently providing grist to the mill of the forces that labour to dismantle our Union.